Costco Rx sales up in 2007, but pace slows
ISSAQUAH, Wash. —Costco produced another year of strong pharmacy sales for fiscal 2007 and is planning to open its second central-fill center sometime in 2008.
The 518-store chain didn’t produce the double-digit increase in sales it managed in recent years, but continued to move up the ranks of the country’s top drug store retailers. According to preliminary results for its fiscal year ended Sept. 2 (final results are due in mid-October) Costco’s pharmacy sales totaled $2.72 billion, an increase of 7.9 percent from 2006.
Prescription sales generated $1.347 billion in revenue—a 7.5 percent increase over last year—while OTC sales increased 8.1 percent to $1.370 billion. All in all, Costco vice president of pharmacy Vic Curtis said it was another good year for the chain. “It’s not quite the growth we had the past few years, but that reflects the industry as a whole,” said Curtis. “The industry is trending a little down this year, but it’s still a healthy increase.”
Curtis couldn’t go into details about sales until Costco reports its full-year results in October, but confirmed that it’s sticking with its $10 generics plan that provides customers with 100-count supplies instead of 30. Costco created the plan last December when it was unable to turn a profit on the $4 generic programs other pharmacy chains had adopted.
Curtis said Costco also is close to announcing plans to build a second, central-fill facility that’s due to open in 2008. “We can’t say where the site is right now but we should have it finalized in a couple of weeks,” Curtis said.
Costco opened its first central-fill center in Everett, Wash., in 2006 and the center now processes nearly all online prescriptions and close to half the orders for 39 stores in Washington and Oregon. Costco chief executive officer Jim Sinegal said earlier this year the central-fill center has reduced the cost of filling a prescription “from $6 per script to about $3” and said a second center would probably be built in one of Costco’s busy West Coast markets.
Costco also is teaming with Maxim Health Care for the ninth consecutive year to provide flu and pneumonia immunizations this fall. Flu shots will cost $20 with pneumonia shots running $33.
Fred’s reports both monthly and quarterly record sales
MEMPHIS, Tenn. Fred’s Inc. reported record sales for the five-week and eight-month periods which ended Oct. 6, 2007.
The company said Friday that its total sales for the month increased 2 percent to $161.4 million compared to the same period last year. Total sales for the year-to-date period increased 5 percent to $1.157 billion.
Same store sales for the month rose 1 percent on top of a 5 percent increase in September last year. On a comparable store basis, sales increased 1.3 percent through the first eight months of fiscal 2007 compared with a 2.7 percent gain in the year-earlier period. Same-store sales are a key predictor of how well the company performs in stores that have been open for several years, and how well the newly open stores will do in the future.
“September sales came in at the low end of our forecasted range of a 1 percent to 3 percent increase, affected by unusually warm weather across our markets and the disruption caused by the updating of 98 stores under our refresher program,” said Fred’s Stores chief executive officer Michael J. Hayes. “We look forward to finishing our refresher program in October with the last 60 stores and to a better economic environment for our customers going forward, as the benefits of the minimum wage increase and the focus of Federal Reserve Board on the credit crunch take hold.”
Fred’s opened four stores at the end of September, bringing total store openings to 22 for the year-to-date period. These new store openings have been balanced by the company’s decision to close underperforming stores. In the remaining months, Fred’s Stores said that it plans to open 14 additional stores, with no further planned closings, which will result in a net increase in stores of 2 percent for the year.
Fred’s Inc. operates 702 discount general merchandise stores, including 24 franchised stores in the southeastern United States.
Target to open another 61 stores nationwide
MINNEAPOLIS Target announced that it will be opening an additional 61 Target stores, the company said Friday.
The stores, which will all open Oct. 14, will open in 22 different states. The majority of the stores are making their debut in Arizona, California, Ohio and Texas.
In addition to offering the latest in trend-right merchandise, Target also brings a 44-year tradition of community involvement. The retail chain commits itself to local communities donating more than $3 million each week to area nonprofit organizations, becoming involved in local volunteerism efforts through Target Volunteers, and orchestrating other special projects that help meet area social service, arts and education needs.